RBI Announces Another FX Swap, More OMOs

The Reserve Bank of India today announced an open market operation to purchase government securities and another round of a dollar-rupee buy-sell swap auction, continuing its efforts to ease liquidity shortages in the banking system.

The central bank will purchase gilts worth ₹1 trillion in two equal tranches on March 12 and March 18 under the OMO operations. It will also hold a dollar-rupee buy-sell swap auction of $10 billion with a tenor of 36 months to be on March 24. 

This is the second such swap auction by the RBI in recent months. On March 1, the central bank completed its $10 billion dollar-rupee buy-sell swap auction, attracting bids worth $16 billion.

BasisPoint Insight had reported that more forex swaps would follow as global uncertainties were still elevated. 

The swap followed announcements in late January to inject ₹1.5 trillion in the system through various measures including OMO purchases of gilts and variable rate repo auctions. 

The liquidity deficit was reported to have touched ₹3 trillion at that time. 

The liquidity deficit eased to ₹204.17 billion as on March 4, from ₹1.1 trillion on the previous day following the first swap auction. The settlement of the auction was on March 4.